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meantime both Rublee and I are doing our best to obtain the best possible terms for the Gulf. [End paraphrase.]

CAFFERY

821.6363 Barco/447 : Telegram

The Secretary of State to the Minister in Colombia (Caffery)

[Paraphrase]

WASHINGTON, February 18, 1931–6 p. m. 8. Your 17, February 17,7 p. m. Gulf says it has already agreed to point (a) in Rublee's memorandum. Gulf feels that it cannot agree to point (6) because in any wildcatting venture such as this it is impossible to predict whether oil will be found and therefore whether exploitation can commence on any arbitrary date. It might be possible to have the property in exploitation in 6 years and it might be impossible to do it in 10 years. Mr. Wallace stated that the Minister of Industry had asked for an 8-year term. The company also stated that the construction of the pipe line and other features were being linked with this condition. They received Folsom's cable at noon today, are studying the same, and will send him an answer this afternoon.

STIMSON

821.6363 Barco/450: Telegram

The Minister in Colombia (Caffery) to the Secretary of State

[Paraphrase]

Bogotá, February 25, 1931–5 p. m.

[Received 10 p. m.] 21. My 17, February 17, 7 p. m. Yesterday the President sent for me. (This morning he repeated the same conversation to Rublee.) He stated that he appealed to me for aid in the Barco matter. Both he and his Minister of Industries had agreed to sign the contract (as set forth in Rublee's memorandum). Since then, however, the President has been forcibly reminded that powerful political factors here were in a position definitely to prevent the contract's approval by Congress unless certain additional changes were made. The President by no means put these forward as demands, but on the contrary he hoped that Gulf would again help him with the contract in order to get it in shape to get it through Congress. He realizes that this will try Gulf's patience but it is only the risk of failure in Congress that induces him to make the request.

(1) The President is convinced that it will be useless to present the contract to Congress without the addition of a clause to article 10 stipulating that in the event that a dispute shall arise as to the amount of the royalty payments, the company shall pay to the Government the amount the company admit is due, and the Government will sue in the courts any balance it claims as due.

(2) Also, the President would like very much to have a clause included fixing a 10-year term at the end of which exploitation must commence or the contract be given up. The President is of the opinion that it would be difficult to get the bill through Congress without this clause, but he is willing to present the bill to Congress without it.

I respectfully make the suggestion that the Department use its good offices with the Gulf to induce it to accept at least the first change desired by President Olaya.

I was assured by the President that the Government would raise no more questions. He added that he wanted to sign the contract and send it to Congress on March 1, next, because he much desired to close Congress.

CAFFERY

821.6363 Barco/456 The Assistant Chief of the Division of Latin American Affairs (Matthews) to the Assistant Secretary of State (White)

[WASHINGTON,] February 26, 1931. With reference to Mr. Caffery's telegram No. 21, February 25, 5 p. m., concerning the Barco matter, and especially to the first point raised therein by Olaya, the following explanation may be of interest to you:

As you will recall, an agreement was finally reached in December, 1928, between Montalvo and the Tropical Oil Company settling their two years dispute concerning royalty payments (the interpretation with respect to refined products to be given clause 5 of the Tropical's contract).234 This agreement provided that the Tropical should pay the Government immediately what it considered to be royalty payments due, and that the question of additional amounts claimed by the Government, based on its interpretation of clause 5, should be left to the Supreme Court by means of a suit brought by the Government. Public opinion in Colombia would probably regard that settlement as in the nature of a precedent, and since its provisions are substantially what Olaya is asking as an addition to clause 10 of the proposed Barco contract, I share his opinion that the omission of such additional clause would lay the contract open to attacks in Congress.

me See telegram No. 189, December 16, 1928, from the Minister in Colombia, Foreign Relations, 1928, vol. II, p. 603.

While the Gulf seem to me to have been quite conciliatory and reasonable in their present negotiations, I feel on the other hand that Olaya is sincere in wanting the changes primarily, if not entirely, in order to obtain congressional approval. I wonder if the Gulf fully realize: (1) that this is in effect their last chance to get back the Barco; (2) that Olaya is pressing for a settlement chiefly because he feels “under certain definite obligations to the Department”; and (3) that the Gulf's chances of a favorable Supreme Court decision are “extremely remote”.

H. FREEMAN MATTHEWS

821.6363 Barco/454 : Telegram

The President of Colombia (Olaya) to the Colombian Legation

24

[Translation)

Bogotá, February 26, 1931. Please give my cordial compliments to Mr. White and deliver to him the following message:

As you are aware, my greatest desire is to eliminate all the difficulties which may formerly have existed in the development of commercial, industrial and other ties between Colombia and the United States. Among the difficulties referred to are those relative to the so-called Barco concession, and in order to close a definitive adjustment there are lacking only certain points, which are, properly speaking, explanatory statements of conditions, for the purpose of preventing, later on, any risk of future disputes and possible difficulties. I believe that on this point the interest of the Company, that of the Colombian Government and that of the United States coincide or ought to coincide so that the new contract may be a clear and unambiguous document and an effective guarantee of cordial relations and harmony between the company and the Government. Minister Caffery, whose valuable aid I highly appreciate, shares with me this opinion and for that reason he has offered to recommend by cable the adoption in the contract of certain stipulations which Caffery will detail to the Department and which I sincerely believe serve principally to eliminate from the contract ambiguities which later might be the source of difficulties and disputes. If the points referred to in Mr. Caffery's cable are accepted by the Gulf, the contract would be signed immediately and we would proceed to present it at once to Congress, supporting it before that body very vigorously in order to bring about its prompt approval. It would be deeply regrettable if because of in

* Copy hånded to Assistant Secretary White on February 26 by the Colombian Chargé.

complete understanding of the situation we should endanger a negotiation which we have succeeded in bringing almost to an end after overcoming a great many obstacles. I hope that this time the cooperation by friends in the Department will not be lacking for the success of an effort advantageous in every sense and which will contribute also to widening the field in which we can develop further the friendship between our two countries.

PRESIDENT OLAYA

821.6363 Barco/452: Telegram

The Secretary of State to the Minister in Colombia (Caffery)

[Paraphrase]

WASHINGTON, February 27, 1931—2 p. m. 10. Your 21, February 25, 5 p. m. It is our understanding that the company will accept the first modification suggested by President Olaya with regard to any disputes in royalty payments, provided the Government of Colombia agree that if it intends to file suit in any given case it will do so within 90 days thereafter, so that the books of the company will not be held open indefinitely and so that the company can know what liabilities it may have to meet.

With respect to the second point, it is the feeling of the company that it cannot agree to a fixed term at the end of which exploitation must begin because no one can predict what petroleum resources may exist there and how soon it will be possible to commence exploitation. Probably the company will make a counterproposal to the effect that if in a given time the minimum production stipulated has not been reached, it will put more drilling rigs into operation.

The Department, of course, does not undertake to pass upon the contract as a whole; nevertheless, it hopes that these offers of the company will make it possible for the two parties to reach a satisfactory agreement at any early date.

STIMSON

821.6363 Barco/455 : Telegram The Minister in Colombia (Caffery) to the Secretary of State

Bogotá, March 4, 1931—6 p. m.

[Received 8:37 p. m.] 29. Department's telegram No. 10, February 27, 2 p. m. Barco contract signed today.

CAFFERY

821.6363 Barco/470

The Secretary of State to the Minister in Colombia (Caffery) No. 223

WASHINGTON, March 11, 1931. Sir: The Department has received your telegram No. 29 of March 4, 6.00 p. m., reporting the signing of a contract for the settlement of the Barco Concession controversy by representatives of the South American Gulf Oil Company and the Colombian authorities. The Department has noted with great satisfaction the skill, tact and good judgment which you have exercised in extending your informal good offices to assist the private American interests involved and the Colombian Government to arrive at a mutually satisfactory settlement of this long pending and difficult question, and desires to commend you upon the successful termination of the controversy. Very truly yours,

For the Secretary of State:

FRANCIS WHITE

821.6363 Barco/507 : Telegram

The Minister in Colombia (Caffery) to the Secretary of State

[Paraphrase]

Bogotá, April 16, 1931–11 p. m.

[Received April 17–1:21 a. m.] 50. My 37, March 13, 11 a. m., despatch No. 2388, March 27, and first numbered paragraph telegram 49, April 10, 4 p. m.25 This afternoon President Olaya told me that it now appears impossible to have the present Congress ratify the contract without modifications; that he wanted to close the Congress now with the idea in mind of reintroducing the contract in the new Congress in July; he thinks he can make "combinations with new elements" in that body so as to get the contract ratified. He will not do this if the Department objects, but will continue the fight now. He “needs” the continued good will of the Department and especially for two matters:

(1) He fears that the banking group, whom he suspects of the most sinister designs, may endeavor

to break up his negotiations over the Swedish match monopoly and he wishes the good offices of the Department in case of necessity.

(2) He wants the informal good offices of the Department in case of necessity in the matter of his requested advance from the United Fruit Company, and he hopes that the Department will express its general attitude in the premises to me. See my despatch No. 2403, March 30.26

* None printed. * Not printed.

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